DIY investing coming in, advisors going out?

by Rebecca Root25 Nov 2015

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DIY investing coming in, advisors going out?

A new survey has found that 90% of people who use self-directed investing are happy with their experiences. Despite perhaps not having any professional investment background, those who have shunned the services of an investment advisor and are going at it alone seem to be satisfied. Unfortunately that satisfaction could leave many advisors out on the cold should others follow the modern-day trend of getting stuck in yourself.

The survey, conducted by TD, indicates that that just might happen suggesting that the number of investors who are managing at least part of their investments directly could double within the next 10 years with 34% of the 1750 polled saying they would consider self-directed investing in the future.

Calvin MacInnis, President of TD Direct Investing, said: "Many self-directed investors tell us they like the flexibility and control of managing their investment decisions, as opposed to thinking it will get them better returns than working with a financial advisor.”

Rather than it being about making more money or believing in their own abilities, it seems that it’s the control of their own money that the investors like. That is worth potential losses or poor decisions.

"In fact, most self-directed investors say they have either consulted or still consult a financial advisor to help them."

While this means the services of an advisor aren’t totally cast aside just yet, it does hint at planners having less of a significant role in a client’s investment plans. However, it may just mean that investors want more of a collaborative relationship with their planner as opposed to having a one-way advisory street.

While you would expect that these independent investors, having been so hands on, would opt to seek out information online, again utilising that DIY element as opposed to seeking out a planner, it seems the information out there isn’t sufficient enough.

The survey found that 54% of respondents using self-directed investing said there was a lack of information tailored to their specific needs, not enough educational content available on websites, or that websites are too complex and difficult to navigate.

"A growing number of our self-directed clients are looking for a suite of professional-level tools, analytics and resources, which are also intuitive and tailored to their unique needs, to help them stay on top of the markets," said MacInnis.

With over 200 robo-advisors online it seems hard to believe there is a lack of information out there but perhaps the quality is lacking. This means that robo-advisors aren’t dominating the marketplace just yet and that the level of advisory skills a planner can offer aren’t yet matched by online tools.

While it could mean planners aren’t being dismissed just yet, it could just encourage digital platforms to upgrade their information. It could also mean that finance professionals need to continue to develop the services they themselves offer online to help ensure investors are still using their particular services regardless if it’s face-to-face or in a digital capacity.

TD is already developing this idea along with other banking and investment groups by providing their own programs. This was they are still providing professional information to investors and if clients deem their tools as useful, perhaps when things go wrong they’ll return to that particular investment group.

"That's something we're providing with our Advanced Dashboard streaming platform and a newly redesigned WebBroker®, with a cleaner, more modern look and feel."